Do you qualify for a VA loan but are confused about how a VA mortgage works? In this episode of Aloha O'ahu, I'm going to explain to you why the VA loan is a smart way to finance your next home. We’ll find out what the VA loan is, who qualifies, and the steps you need to take to get the benefits.
I'm going to talk about VA
mortgages and why if you are a vet using your VA loan is a really smart option. By the way, I'm going to speak generally about
this type of loan because I'm not a lender, but I can refer you to one for more complete
information and they can speak to you specifically about your situation.
So what is a VA loan? a VA loan is a product that is available to active duty service members and veterans who have received an honorable discharge to help them purchase a home. The Veterans Administration does not provide the funds for the loan, but they do guarantee the loan up to a certain amount.
So let's talk about some of the key features of a VA loan.
First, there is no longer a maximum loan limit as of 2020. There is no maximum loan limit for a VA loan,
but there is a maximum amount the VA will guarantee in case of a default in higher-cost areas such as Hawaii, the VA will guarantee you a loan of up to 1.07 3 million for any amount above that you will have what is called a VA jumbo loan, which may have slightly different
rules that I will discuss as we go along number two VA loans usually have lower rates due to the VA guarantee VA loans usually have lower interest rates than comparable conventional loans and who doesn't like lower rates, especially now number three VA loans require lower down
payments, VA loans can have much lower down payments and in a few cases as low as $0. Technically, all lenders offer 0% down payment options for VA loans below the guaranteed limit. Once you get into the land of jumbo VA loans, the lender may require a down payment which is still going to be less than a conventional loan down payment, or they may possibly require you to have a higher credit score. This lower downpayment is a key feature that
opens up homebuying doors for many veterans. Please note that it is the lender who can
require as little as no money down. But there is a practical side to this.
On the real estate side, the seller is going to want to see that the buyer is putting some money down so that they know you're serious. We can talk about that amount based on the property you're interested in buying. Number four is closing cost limits. VA loans have specific limits on closing costs,
which can help keep those costs down for veterans. As you can see, the VA loan offers some great
benefits for eligible buyers. There are some requirements and features that you must be aware of though as you look into a VA loan. So to recap these key features for VA loans, there is no maximum loan limit. VA loans have lower rates, they have lower down payments, and there's a limit to closing costs. VA loans must be used as the primary residence where the veteran is planning on living after the purchase. It can't be used for a vacation home or an
investment property veterans have what is called the VA entitlement, which is the maximum amount the VA will guarantee for that veteran. What this means in Hawaii with our high price points is that a veteran really can only have one VA loan at a time. This does not prevent you from selling a home
and then we're using your entitlement for a new purchase, but it will require a little bit of time and work for your lender. VA loans have a funding fee that is paid upon closing this fee can actually be rolled into your purchase so that you do not have to pay the money upfront at closing. The funding fee will range between 1.4% and 3.6% of your loan value depending on if this is your first VA loan and the amount of your
downpayment.
Also remember that if the veteran received a Purple Heart or had a service-related disability, then the funding fee is waived. VA loans also require very specific appraisals by designated appraisers because the VA is actually guaranteeing your loan the appraiser will look closely at the safety and livability in the home as well as ensure that the home is properly permitted. The extra diligence on VA appraisals does
scare some sellers and may require extra work from your realtor to get your VA offer accepted. In the end. Even though there can be some extra steps
and challenges on closing a VA loan the savings and benefits are often well worth it.
My home was purchased using a VA loan and it was definitely the right move for my family.
I hope this article gave you some insight into how a VA mortgage works.
If you're interested in learning more about your VA eligibility, I'm happy to refer you to a lender that knows all about VA loans, they
can delve into your goals, and any debt issues you may need help with and come up with a proposal specifically tailored to your needs. Whether it's determining how to use a VA mortgage now or within the next six months learning about all of your financing options is exactly how you make a smart and disciplined real estate investment.
So if you'd like to learn more, please feel free to contact me at one of the ways listed below and we'll connect with a lender if
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